UPDATED 16:39 EDT / JUNE 09 2011

Dell Compellent CEO Talks Startup Innovation, Tech Bubble

It’s Dell Compellent Phil Soran’s third visit to theCube during the Dell Storage Forum, making him a regular guest going all the way back to theCube’s early days, all of 12 months ago.  Back then Compellent was still in talks with Dell regarding an acquisition, a development even Soran didn’t let onto during a visit to theCube at VMWorld 2010.  He’d even kept mum on the hot topic of the day, which was HP and Dell’s bidding war over 3PAR.  Storage was an important rivalry for these two companies then, and that remains today, as demand for a more efficient and scalable storage solution drives innovation, investments and acquisitions that affect the entire cloud industry.

Since becoming part of Dell’s family, Compellent CEO Phil Soran has had a shift in culture, which is something to be expected when joining another company.  To Compellent’s 600 employees, Dell has some 10k, marking a major difference in structure for the transitioning team.  But even at the Dell Storage Forum this week, there seems to be a company wide appreciation for Compellent, with several welcoming the startup to the Dell brood.

The transition is something Soran discusses with theCube hosts Dave Vellante and Cali Lewis, noting the experience as a sort of throwback to his early days at IBM.  Soran was on the fast track, selling IBM storage components, leading ahead of his Harvard-educated coworkers because of his fluid style.  It’s something he learned from his earlier time spent as a junior high school math teacher, which Vellante brought up as Soran reminisced on his unconvential rise to the top.

“So what got you into the startup business?”  Vellante goes on to ask.

“I look back and I don’t know what I was thinking when I did this,” Soran begins the coming-of-age story as an entrepreneur.  After reaching the end of his IBM carrer path, Soran reached back to his childhood love of starting businesses, and went to work for a small software company.  “The thing that was really good there, though it wasn’t a big success, the CEO let me help him raise money,” Soran explains.

“You don’t learn about fundraising at IBM so he let me vicariously learn through him.  I got to see how he did it and that ended up being a very key skill.”

Learning how to schmooze the investor sector is certainly an important skill set, one that surely benefited from Soran’s fluid teaching days and sales experience at IBM, despite him saying it had a little bit to do with luck.  But as Soran’s story continued to unfold, it became clear that each position he held contributed in its own way to Compellent’s success, and subsequent Dell acquisition.

Soran goes on to discuss the startup he founded, Xiotech.  Not only was the investor climate weak then, but Soran and his team were dealing with a new product whom few were educated about.  “Not only were we a new company, but SANS was a new concept,” Soran recaps. It’s a situation that Soran relived with his next startup, noting that “you better be pretty hands on and direct.  With Compellent, we signed in 2002 and a lot of people hadn’t been educated on that front.  You had to get in front of as many people as you could.  We had innovations.”

Innovation is something near to Soran’s heart, and it’s come up in earlier interviews during the Dell Storage Forum.  A phrase that’s beginning to catch on in coverage of the event, Soran calls legacy companies that stifle acquired startups’ innovation as having “big cattle and no hat.”  It’s also an important aspect of the current cloud environment, which has reached a point in technological development where innovation is highly encouraged and more cost efficient for startups to explore.

One such startup is Infineta, a WAN optimization company that just launched its public beta, and raised $15 million in a Series B round.  Infineta takes a different approach with its hardware, looking to rectify a growing problem with interactivity amongst cloud data centers.  Infineta demonstrates many of the necessary startup attributes Soran goes on to note, as he gives entrepreneurs to get a compatible investor, do the right research, and have a good product.

Vellante then asks about the unbalanced investor behavior on the east and west coasts, asking Soran if he thinks we’re in a bubble.  He acknowledges that there’s a clear bubble in the social media sector, with another bubble seemingly forming in the storage sector, a development that began surprisingly early in Soran’s opinion.  In some ways a bubble could be good for innovation, as venture funding flows a little more easily.  Right now storage is at the center of all this, which could be quite lucrative for entrepreneurs.

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